Need to Know More About The Tenant Fee Ban?

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Tenant Fee Ban:

The Tenant fee Ban was first introduced to the public as a Bill after discussions with Parliament in May 2018 and was passed into law on 12th February 2019. The proposal was to ban all letting agents, landlords and anyone acting on behalf of the landlord to pay any fees, such as referencing fees and administration costs from 1st June 2019. Three fees are exempt from this ruling: late rent payment fees, loss of keys and changes made to a tenancy agreement.

Late payment of Rent:

Landlords and letting agents are able to charge late payment fees to tenants only when the rent is over 2 weeks late. The late rent payment fee is capped and must not exceed 3% above the Bank of England base rate. As the base rate is calculated annually the fee charged to tenants for late rent payments will need to be calculated on a pro-rata basis.

Loss of Keys

When a tenant has lost a set of keys, access fob or device to enter the property the landlord would not be expected to pay for this mishap. A reasonable cost can be requested from the tenants, for example, if an access fob cost £20 then this charge will be required from the tenant and a receipt should be provided to the tenant.

Changes to a Tenancy Agreement

A change to the tenancy agreement instigated from the tenant directly can be charged back to the tenant at no higher than £50, unless the landlords can prove why a greater cost has incurred. Importantly, this charge is prohibited for contract renewals and extensions and will only be applicable to add additional clauses to the tenancy agreement, such as a pet being allowed into the property or to add a new tenant to the agreement. A payment for early termination of a tenancy agreement can also be charged back to a tenant as this is breaking the original legally binding tenancy agreement, however, the payment cannot exceed the loss suffered by the landlord or reasonable costs incurred by the letting agent.

Holding Deposit

Landlords and letting agents can ask potential tenants to provide a holding deposit whilst they are conducting referencing, this can be up to 1 week’s rent and must be held for no longer than 15 days. If the landlord declines the tenant after referencing the holding deposit must be returned within 7 days. If the landlord agrees to proceed with the tenancy then the holding deposit may be used as part of the rent or deposit. There are some exceptions when a tenant may not be refunded the holding deposit, for example, if the tenant decides not to go ahead with the tenancy or if the tenant fails the right2rent check or if the tenant provides misleading information.

Tenancy Deposit

The deposit is limited to the equivalent of 5 weeks’ rent for new and renewed tenancies, (or 6 weeks if the annual rent is £50,000 or more). The deposit limitation also applies to existing tenancies where the tenant has paid a deposit before the tenant fee ban was introduced, if the tenancy is renewed then the difference will need to be refunded so that the deposit does not exceed the legal maximum.

 Please contact our Letting Department if you have any queries or concerns! 


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